Japan Saw A Tenfold Rise In Crypto Money Laundering Cases In 2018

Japan is usually known to be at the forefront of the latest tech innovations, and the FinTech sector isn’t exempt. Currently, Japan ranks as one of the most crypto-friendly jurisdictions in the entire world, and is considered a burgeoning crypto Asian hub.

However, the country has recently seen a startling increase in cryptocurrency-related money laundering cases, with more than 7,000 incidents reported to authorities in 2018 alone. According to the Japanese National Police Agency, the number jumped more than tenfold — up from the 669 initially recorded cases between April and December in 2017. This sharp increase happened right when cryptocurrency exchange operators were required to report all transactions suspected to be linked to the movement of illegally obtained cash, so it’s unclear whether this is a crime trend or simply a manifestation of better reporting.

Due to cryptocurrency’s anonymous nature, police claim that many cases involved using the virtual currency to pay for illegal drugs, child pornography, and other activities on the dark web. It was also found that among the 7,096 dubious transactions, some users shared the same ID photo despite having different names and personal details. On the other hand, there were accounts that appeared to have logged in from overseas devices even though their listed addresses were based in Japan.

Putting together the laundering-related transactions and other abusive cases, Japan’s registered cases clocked in at a total of 417,465 in 2018. Out of this number, 346,014 (83%) were found to involve banks and other financial institutions, while 15,114 (3.6%) involved credit card companies. These figures mark a significant jump from the 17,422 total cases that were reported in the previous year.

While certainly a cause for concern, authorities have assured the public that they are already upgrading their security methods, training specialists, and using tech such as Artificial Intelligence to detect malicious patterns. Last year, it was announced that a new law enforcement unit from Tokyo would raise efforts to combat cybercrime. But it seems they need to bolster their security arm further for the year ahead, especially if they want to maintain or grow their status as a crypto hub for the region.

All in all, there are many barriers to cryptocurrency’s mass adoption, as outlined on FXCM. These include regulation, scalability, and volatility. Generally, the Japanese have been ahead of the curve because of their openness to new tech compared to other countries. In fact, financial experts at Hacked have hailed it as representing the future of cryptocurrency itself, but if the laundering numbers continue to rise, it could hinder its growth in Japan and beyond.